In 2000 India’s ruling National Democratic Alliance (NDA) consolidated its hold on power in spite of dissension within the Bharatiya Janata Party (BJP)—the NDA’s major constituent—discord between some of the alliance partners, and concern over the ill health of Prime Minister Atal Bihari Vajpayee. Economic liberalization was stepped up. An exchange of visits by U.S. Pres. Bill Clinton and Vajpayee led to a new warmth in Indo-U.S. relations. The visit of Russian Pres. Vladimir Putin renewed the tradition of close ties between New Delhi and Moscow.

Domestic Affairs

Three new states came into being in India during the year: Chhattisgarh (on November 1), Uttaranchal (on November 8), and Jharkhand (on November 15). They were carved out of three large states—Madhya Pradesh, Uttar Pradesh, and Bihar, respectively. Bills enabling the formation of the three new states were adopted by both houses of Parliament with virtual unanimity.

Elections to the legislative assemblies of the states of Bihar, Haryana, Manipur, and Orissa were held. In Bihar the victorious NDA candidate for chief minister, Nitish Kumar, was unable to form a government and resigned his post after only seven days in office. Former Bihar chief minister Rabri Devi of the Rashtriya Janata Dal returned for a third term. In Orissa the BJP–Biju Janata Dal coalition swept the polls and formed a government under Naveen Patnaik; the Congress (I) party, which had held power, was routed. In Haryana the BJP–Indian National Lok Dal coalition, led by Om Prakash Chautala, retained power. In Manipur the Congress was displaced by a coalition headed by Wahengbam Nipamacha Singh.

Two other states had new chief ministers in October. In Uttar Pradesh the BJP asked Rajnath Singh to take over from Ram Prakash Gupta. In Goa the BJP withdrew its support from coalition chief minister Francisco Sardinha and formed a government of its own headed by Manohar Parrikar. In November, Jyoti Basu of the Communist Party of India (Marxist) stepped down from the chief ministership of West Bengal after holding that office continuously for 23 years and was succeeded by Buddhadeb Bhattacharya of the same party.

Jammu and Kashmir continued to be a source of contention between India and its neighbours. The state was convulsed by the activities of militants during the year. Hundreds of civilians were killed in terrorist attacks, including about 30 Hindu pilgrims bound for the holy temple in Amarnath on August 1. The government’s efforts to open negotiations with the militants did not make headway. Leaders of the All-Party Hurriyat Conference were released from prison in May. The separatist Hizbul Mujahideen made an offer of cease-fire in July but abruptly withdrew it. When Pakistani Chief Executive Gen. Pervez Musharraf offered to hold talks on Jammu and Kashmir, New Delhi replied that there should “first be total cessation of Pakistani-sponsored terrorism.” In late December, Prime Minister Vajpayee announced that he would extend a unilateral cease-fire in Kashmir by an additional month and that he would begin to take “exploratory steps” to revive peace talks with Pakistan. In response, Pakistan withdrew its troops from the Line of Control, which separated the two countries.

P.V. Narasimha Rao, India’s prime minister from 1991 to 1996, and Buta Singh, a former home minister, were found guilty by a special court on September 29 of having bribed Lok Sabha (House of the People) members in order to survive a vote of no confidence in 1993. Both received three-year prison sentences on October 12. Later the Delhi High Court suspended the sentence and permitted them to appeal. H.K.L. Bhagat, a former central minister, was cleared of involvement in anti-Sikh violence that had followed the assassination of Indira Gandhi in 1984. On September 30 a 13-year-old boy, Sudarshan Hansda, was sentenced to 14 years in prison for his part in the 1999 murders of an Australian missionary, Graham Staines, and his two young sons in Orissa state. The trial of 14 others charged in the murders was in progress.

The Supreme Court, in a major judgement delivered in October, rejected the petition of environmentalists and permitted the Sardar Sarovar Dam across the Narmada River to be raised to a height of 90 m (295 ft) initially and 138 m (453 ft) eventually. Work on the dam had been halted in 1995 when a petition by the Narmada Bachao Aandolan (Save Narmada Movement) was filed.

The Economy

The economy took a downturn in 2000. A report of the International Monetary Fund, World Economic Outlook, estimated India’s gross domestic product growth rate at 6.7%, but the government’s own Central Statistical Organization placed GDP growth even lower, at 5.8% during the April–June quarter. The annual inflation rate stood at 6.92% at the end of October. The steep rise in international oil prices compelled the government to announce substantial increases in the prices of petroleum products. The foreign exchange reserves at the end of September stood at $35 billion.

The government’s budget for 2000–01, presented on February 29, contained proposals to collect Rs 69 billion (1 Rs = about $0.02) by way of additional taxes. India had an overall fiscal deficit of Rs 1.1 trillion, or 5.1% of GDP. The total allocation for development plans was Rs 1.2 trillion. Allocation for defense was Rs 585.9 billion, an increase of 21% over the previous year.

In May the government announced its intention to divest up to 60% of its holdings in Air-India; the move was seen as a first step toward eventual privatization of the country’s state-owned airline. The government also announced that it would reduce its holdings to 26% in three key public-sector enterprises, Indo-Burmah Petroleum, the State Trading Corporation, and the Minerals and Metals Trading Corporation. The same month, the Department of Telecommunications was converted into a corporation, Bharat Sanchar Nigam Limited, as a step toward disinvestment. Domestic long-distance telephony was thrown open to private-sector competition, with up to 49% foreign equity. The government also announced the opening up of international telephony to private-sector competition in 2002, two years ahead of schedule. An Information Technology Bill, giving a legal framework for electronic commerce, was passed in May. (SeeSidebar.)

Foreign Relations

The diplomatic highlights of the year were the visits to India by President Clinton in March and President Putin in October and Prime Minister Vajpayee’s own visit to the U.S. in September. As a result, Indo-U.S. relations were at their best in 50 years, while India’s traditional friendship with Russia was reinforced. Clinton and Vajpayee issued a statement in New Delhi outlining their “shared vision of a closer and qualitatively new relationship for shaping a future of peace, prosperity, democracy, pluralism and freedom.” Later, in their joint statement in Washington, D.C., they expressed their desire for a continuing institutional dialogue between the two countries. India reaffirmed its moratorium on nuclear explosive tests until the Comprehensive Test Ban Treaty came into effect. There was considerable satisfaction in India that the U.S. had a better appreciation of the threat that India faced from externally sponsored terrorism. During his American visit Vajpayee addressed a joint session of the U.S. Congress as well as the millennium session of heads of state and government at the UN headquarters in New York City.

During President Putin’s visit, a declaration of strategic partnership for the new century was signed, and the two countries agreed to work for a multipolar world and to combat terrorism. In addition, a series of agreements were signed to provide for cooperation in defense production, nuclear energy, and information technology. One of the pacts provided for Russia to supply India with 310 T-90 tanks, to enable licensed production in India of 140 Sukhoy fighter aircraft, to lease four TU-22 bombers, and to give an aircraft carrier that would be refitted at India’s cost. The two countries were also to set up a joint working group on Afghanistan. Addressing the Indian Parliament, Putin emphasized cooperation to combat terrorism and endorsed the Indian position that the country’s dispute with Pakistan over Jammu and Kashmir state should be settled bilaterally without external intervention. India decided to withdraw its troops from the UN peacekeeping force in Sierra Leone.